Question

. Panda Corporation paid cash of $60,000 on June 1, 2014 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2014 adjusting entry is:_____

Answer 1

The December 31, 2014 adjusting entry for Panda Corporation's prepaid rent would be to debit Rent Expense and credit Prepaid Rent.

Step-by-step explanation:

The December 31, 2014 adjusting entry for Panda Corporation's prepaid rent would be to debit Rent Expense and credit Prepaid Rent.

This is because prepaid rent is considered an asset, and as time passes, it becomes an expense.

By recording the adjusting entry, the company recognizes that a portion of the prepaid rent has been used up during the year, reducing the asset and increasing the expense.